Homeownership has long been an important aspect of the “American Dream.” Being a homeowner gives you financial stability and allows you to build wealth through home equity. To help more U.S. citizens become homeowners, there is a set of laws that work to combat discrimination, protect individual rights, and reduce homelessness. Here, we will discuss five of these laws that are the most groundbreaking and important to the housing market we know today.
The National Housing Act, passed in 1934, was created as a part of President Franklin D. Roosevelt’s New Deal in supporting the residential housing market and home construction industry. This act was significant to the U.S.’s recovery from the Great Depression due to the creation of the Federal Housing Administration (FHA). The FHA instituted a mortgage insurance program that was backed by the federal government to reduce the risk of lenders that made loans available to people who wouldn’t qualify otherwise. This program is still implemented today and FHA-backed loans provide more affordable mortgage options for buyers.
The Housing Act of 1937, also signed by President Franklin D. Roosevelt established the United States Housing Authority (USHA). The role of the USHA was to support the construction of low-income housing in cities across the U.S. by providing federal loans to state and local housing authorities. In 1965, the USHA became part of the Department of Housing and Urban Development, working to create economic stability for thousands of Americans.
The Fair Housing Act was passed in 1968 as part of the Civil Rights Act, making it illegal for landlords, real estate companies, municipalities, or lending institutions to discriminate based on race or color, religion, sex, national origin, familial status, or disability. Individuals who believe they are being discriminated against by any of the mentioned parties can file a complaint with the Department of Housing and Urban Development or file a lawsuit. The Department of Justice can also file a suit if it believes that there is evidence of discrimination or denial of rights toward a group of persons. While the act is considered a landmark law, it does not take care of all instances of discrimination. The Department of Justice has admitted that race discrimination continues to be a problem in housing.
The Real Estate Settlement Procedures Act (RESPA) was passed in 1974 to prohibit potentially abusive practices in the real estate settlement process. To accomplish this, the act requires lenders, mortgage brokers, and loan services to provide borrowers with an itemized statement of closing costs. The act also prohibits loan services from requiring large escrow accounts and outlaws kickbacks and referral fees. In 2011, the responsibilities of the act were assumed by the Consumer Financial Protection Bureau (CFPB) because of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Now, the CFPB provides a set of guidelines called TRID, which all lenders must follow to protect borrowers from unethical and damaging practices.
The American Recovery and Reinvestment Act of 2009 was created a year after the housing and financial crisis of 2008. Through this act, the government attempted to start up the economy by passing a stimulus package amounting to more than $800 billion. Of this amount, $14 billion was dedicated to housing, with $4 billion going towards the Department of Housing and Urban Development for repairing public housing and $3.5 billion going towards housing rental assistance.
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